IN INCOME TAX APPELLATE TRIBUNAL C BENCH, AHMEDABAD BEFORE SHRI PRAMOD KUMAR, ACCOUNTANT MEMBER AND SHRI MAHAVIR PRASAD, JUDICIAL MEMBER ITA No. 2813/Ahd/2013 Assessment Year : 2007-08 Maheshbhai Manherlal Shah, ITO, Plot No.7, Amikunj Society, Vs Ward 3 (3), Near Aandhjan School, Ghod Surat Dod Road, Surat PAN : AELPS 1929 M (Appellant) (Respondent) Assessee by : Shri Anil Shah, AR Revenue by : Shri Rajesh Meena, Sr DR Date of Hearing : 23/08/2016 Date of Pronouncement: 16/09/2016 ORDER PER MAHAVIR PRASAD, JUDICIAL MEMBER:- This appeal by assessee is directed against order of Commissioner of Income-Tax (Appeals)-IV, Surat dated 24.09.2013 for AY 2007-08. 2. assessee has taken following grounds of appeal:- 1. On facts and circumstances of case and law on subject, learned CIT(A) has erred in confirming addition of Rs.7,45,165/- on account of unexplained investment. 2. On facts and circumstances of case and law on subject, learned CIT(A) has erred in confirming addition of Rs.1,14,026/- on account of estimated profit on transactions in bank account. 3. Alternate prayer : a request your honour to estimate reasonable profit on amount of transactions in bank account as a has declared income u/s 44AD of IT Act (beneficial section) 4. a craves leave to add, alter, amend, delete all or any grounds of appeal. ITA No. 2813/Ahd/2013 Maheshbhai Manherlal Shah vs. ITO AY : 2007-08 2 3. Briefly stated facts are that assessee is individual deriving income from salary, interest and retail trading. Return of income for year under consideration was filed on 11.02.2008 declaring total income of assessee at Rs.65,280/- which was processed u/s 143(1) of Income- tax Act, 1961 (hereinafter referred to as "the Act"). Subsequently, case of assessee was picked up for scrutiny assessment and assessment u/s 143(3) of Act was framed vide order dated 15.12.2009. While framing assessment, Assessing Officer made addition on account of unexplained investment u/s 69 of Act amounting to Rs.7,45,165/- and Net Profit out of business activity @ 5% amounting to Rs.1,14,026/-; thus totaling to Rs.8,59,191/-. 4. Aggrieved by aforesaid order of ld. AO, assessee preferred first appeal where ld. CIT(A), after considering submissions of assessee, dismissed appeal of assessee by following observations:- 5. I have gone through facts of case, remand report and various submissions of appellant. I have also gone through documents which have been placed before me by appellant as well as A.O. After going through above, I am of belief that claim of appellant needs to be rejected. appellant has claimed that he had mentioned impugned account in very first hearing before A.O. This is incorrect. assessee has placed before me at pages-89 to 91 of his paper book, filed with letter dated 27.02.2012, copy of his reply to A.O. during course of assessment in which he is giving details regarding himself and his family members. This letter is detailed reply regarding assets - movable and immovable. In details of bank accounts of all family members impugned bank account is not mentioned. facts mentioned in same letter are in such great detail that claim of appellant that his and his wife's accountant were different for which reason he was not aware of transactions in impugned bank account being reflected in his wife's return leading to his admission before A.O. also need to be rejected as afterthought. appellant has claimed that transactions in account were reflecting in accounts of his wife is not borne out by facts which were on record of Department. total credits in account were in excess of Rs.22,00,000/- which included cash of Rs.19,44,042/-. In return of appellant's wife filed on 16.01.2009, computation shows ITA No. 2813/Ahd/2013 Maheshbhai Manherlal Shah vs. ITO AY : 2007-08 3 that income was offered u/s. 44AF and turnover was only Rs.1,85,925/-. business has been mentioned as "tailoring job work and interest". appellant has however claimed business as retail cloth. Again, wife's balance sheet filed with return of income and available with Department is different from balance-sheet now produced. This anomaly has been brought out in remand report of A.O. In their counter comments to remand report it has been claimed by appellant that there is no difference and in support thereof bank reconciliation and confirmation from one Shri Ramdas Marutibhai Damugade has been filed to justify same. It has been claimed that appellant's wife received advances for sale of property which was returned to prospective buyer by cheuqe on 31.03.2007 (last day of financial year). It was explained that said cheque had been entered in their bank book leading to there being Nil balance for which reason said account was not shown in balance sheet but as cheque had not been cashed within financial year there was credit balance appearing in account. appellant was asked as to when cheque issued to prospective buyer returning advance was encashed to which it was submitted that cheque was not encashed at all and returned to appellant's wife as differences were reconciled. theory of reconciliation is therefore unverifiable from any independent source. close analysis of cash book produced lays bare ingenuity of appellant in trying to explain non appearance of Dena Bank in balance sheet filed with Department. appellant in cash book has made entries for receipt of advances for sale of flat starting from 19.01.2007. These have been received in small amounts in cash on several dates last payment being received on 30.03.2007 and on very next day, i.e. 31.03.2007, it is returned by cheque due to differences between parties but cheque is never encashed and returned to appellant as differences are reconciled leading to no entry in any bank account but only so-called cash book prepared by appellant. All evidences taken together clearly establish that justifications have been prepared as afterthought only to avoid payment of due taxes. argument has been put forth by appellant that though admission is good piece of evidence it is not conclusive and it is open to appellant to show that contrary facts existed. In appellant's case he had made admission before A.O. in unequivocal terms, not once but twice. His attempts at showing that said admission was incorrect have failed miserably. addition made is therefore confirmed. All grounds are dismissed. 5. Now assessee is in further appeal before this Tribunal. 6. Ld. Counsel for assessee contended that assessee and his wife are doing business of retail trading of cloth on small basis and they do not ITA No. 2813/Ahd/2013 Maheshbhai Manherlal Shah vs. ITO AY : 2007-08 4 have infrastructure and full time accountant. It is submitted that there was mistake in filing return of income for year under consideration inasmuch as bank account was not disclosed in books of accounts of assessee as it was first e-return of assessee. It is also contended that revised balance-sheet was produced during course of remand report proceeding with intension to rectify bona fide mistake. In return of income bank balance was not shown as there was Nil balance as per books of accounts after reconciliation of cheque issued. ld. Counsel for assessee submitted that there was no intention on part of assessee to conceal bank account, instead it was disclosed said bank account during scrutiny proceedings. Alternatively, ld. Counsel for assessee pleaded that alleged SB account is reflected in his wife s account and if at all addition needs to be confirmed, it was requested to estimate reasonable profit on amount of deposit in bank as it represents sale proceeds of cloth. 7. On contrary, ld. DR opposed submissions of ld. Counsel for assessee and supported orders of authorities below. 8. We have heard rival contentions, perused material available on record and gone through orders of authorities below. We have noticed in case of Shri Dineshbhai Dhansukhlal Mithaiwala in ITA Nos.555/Ahd/2010 and 321/Ahd/2013 Co-ordinate Bench of this Tribunal in materially identical situation has restricted addition to 3.5% of deposits in bank account representing sales. We have noted that, according to assessee, account was inadvertently included in his wife s books of accounts, and, at best credits to these accounts can be treated as suppressed sales. In view of facts and circumstances of case coupled with fact that smallness of amount involved, we ITA No. 2813/Ahd/2013 Maheshbhai Manherlal Shah vs. ITO AY : 2007-08 5 have no reason to take any other view in matter than view taken by Co-ordinate Bench in case of Shri Dineshbhai Dhansukhlal Mithaiwala (supra). Thus, ld. Assessing Officer is directed to re- compute addition in light of our above observations. Accordingly, appeal of assessee is partly allowed. 9. assessee s appeal is partly allowed as indicated above. Order pronounced in Court on 16th September, 2016 at Ahmedabad. Sd/- Sd/- PRAMOD KUMAR MAHAVIR PRASAD (ACCOUNTANT MEMBER) (JUDICIAL MEMBER) Ahmedabad; Dated 16/09/2016 Biju T. Copy of Order forwarded to : 1. Appellant 2. Respondent. 3. Concerned CIT 4. CIT(A) 5. DR, ITAT, Ahmedabad 6. Guard file. BY ORDER, TRUE COPY / (Dy./Asstt.Registrar) , ITAT, Ahmedabad Maheshbhai Manherlal Shah v. ITO, Ward-3(3), Surat